Meta Strategy Trading Portfolio – Probability Map Update.

Lockout Rally

The unabated stock market advance has secured itself a place in the top 10 of all momentum rallies of the last 75 years.

That most market participants were caught completely off guard during heavily short and over-hedged positioning is a necessary ingredient for such fulminant rallies.

However, we are nearing the end of the first phase of a recovery that will likely last much longer.

Simply put, the current rally trajectory is unsustainable and, historically, when first surpassing their old all-time high equities tended to re-calibrate their steep upward trajectory via a lengthy sideways consolidation.

This will provide high-probability entries for the second phase: A much shallower rally trajectory coming out of the expected consolidation.

This is flagged as a green-light opportunity by me, because the next phase can be anticipated quite well.